NBC Universal chief executive Jeff Zucker on Sunday urged colleagues to take a stand against Apple's iTunes, charging that the digital download service was undermining the ability of traditional media companies to set profitable rates for their content online.

"We know that Apple has destroyed the music business -- in terms of pricing -- and if we dont take control, theyll do the same thing on the video side," Zucker said at a breakfast hosted by Syracuses Newhouse School of Communications.

His comments Sunday were the most aggressive yet since NBC informed Apple last month that it had decided not to renew its contract to sell digital downloads of television shows on iTunes after this year.

NBC originally claimed to be seeking more control over the pricing of songs and videos that it was selling on iTunes, in addition to better piracy controls and more flexibility to bundle video content in an effort to increase revenues.

For its part in the bitter feud, Apple responded by saying NBC was asking for a twofold increase in the wholesale price of its TV show content, which would have resulted in the retail price to iTunes customers increasing to $4.99 per episode from $1.99.

Answering questions at the breakfast Sunday, Zucker offered substantially more color on the iTunes matter, explaining that it was a relatively easy decision for NBC to walk away from the Apple download service because it had only earned about $15 million from the service last year in spite of accounting for about 40 per cent of the videos sold on the store.

He said NBC routinely propositioned Apple to breach its standard pricing model and experiment with higher pricing for one hit show such as Heroes by raising the price from the iTunes standard $1.99 to $2.99 on a trial basis.

We wanted to take one show, it didnt matter which one it was, and experiment and sell it for $2.99, he said. We made that offer for months and they said no.

The NBC chief also revealed that in addition to more pricing flexibility, his firm was also seeking a cut of Apple hardware sales -- such as the iPod and iPhone -- which were capable of viewing content downloaded from the iTunes Store.

"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money," he said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing."

Zucker's comments also arrive just as NBC and NewsCorp. are launching their joint online video venture, Hulu.com, which aims to compete with iTunes by offering streaming TV and other commercial video content to viewers under an ad-supported model.

He said that 50 million streams of TV shows accessed on NBC.com during the month of October are proof that there is a demand for traditional TV series on the web.

Its extraordinary, he said. Its like a small cable channel in our universe that is becoming very successful.

"We know that Apple has destroyed the music business -- in terms of pricing -- and if we don’t take control, they’ll do the same thing on the video side," Zucker said at a breakfast hosted by Syracuse’s Newhouse School of Communications."

Hey NBC: As a member of the demographic you are marketing to, I say Apple corrected pricing schemes. And that was up from zero (i.e. torrents) while taking down hyper-agressive DRM. Welcome to the age where shit media content and shit usage rights only gets you shit.

"The NBC chief also revealed that in addition to more pricing flexibility, his firm was also seeking a cut of Apple hardware sales -- such as the iPod and iPhone -- which were capable of viewing content downloaded from the iTunes Store."

He's got it backwards - Apple's hardware (and others) has expanded the market for their content! But I see his point - $15 million profit is peanuts

-JD-- "If Apple wasn't so greedy, they would build G6's and give them away!"

What the HECK is wrong with NBC?
$1 a song, a CD= $10 for about 12 songs hmmmm, I guess it was supposed to be $10 = 2 good songs + filler?
Box sets for TV shows are cheaper then buying on iTunes like $30-$40 vs $40-$50, and I get a real box that costs money to make and take up shelf space, can be sold to other people thus destroying another sale and is better quality.

It's still to expensive for me to get shows off iTunes IMO, I pay ~$40 a month for cable and have Tivo (the nice old unlimited plan).

NBC is a bunch of greedy, idiots. Why the heck would they expect a percentage of iPod sales? It's like frozen food companies wanting part of the profits for freezers!

Doesn't bother me at all if I have to pirate NBC's stuff if they won't sell it to me.

If I was Steve I would knock him out. If it weren't for apple they'd be stuck with there own silly efforts at there own digital distribution methods.
It's iTunes's pricing that brought people away from Peer 2 Peer in the 1st place.

The funny thing is, there's a certain class of consumer who reads stories like this and thinks "Apple is horrible! They are destroying music!"

I suspect Apple--and consumers--will both enjoy a transition to multiple DRM-free stores (like iTunes and Amazon), and tons of iPod sales to play them. As the music labels wonder what on Earth is happening, and why their DRM efforts make so much less money than their DRM-free experiments.

NBC is being extremely unprofessional with how they are handling this. It almost seems like they are going out of their way to burn this bridge permanently.

Also, I don't get their statements about how Apple 'destroyed' music and video pricing. Do they expect customers to pay *more* for digital content than they do for the physical media?

As it is now, the digital content comes out to being just about the same price as the physical media (maybe a tad less), and they don't have to worry about the cost associated with having the product packaged and the retail outlets taking a cut.

I just don't understand it. It seems like NBC is complaining just to complain.

What the HECK is wrong with NBC?
(...)NBC is a bunch of greedy, idiots. Why the heck would they expect a percentage of iPod sales? It's like frozen food companies wanting part of the profits for freezers!(...)

Yeah, or a cellphone manufacturer wanting a cut from the mobile provider - that would be absurd, I tell you, ABSURD!

And you wonder why NBC has dropped from #1! It's because of arrogant idiots like him ruining their standing by forgetting their client base and focusing on the almighty dollar! Perhaps he needs to take a page from Apple's playbook, it's relatively simple but does contain that most forgotten thing in the business world. Common Sense. Give the customer what they want at a fair price and they will return!

Zucker - Thanks for helping me make my mind up as to which network to watch.

With a mindset like his, it's little wonder that NBC is the network in third place (or is it fourth?) and Universal is in fifth place as a film studio. Yeah, all the execs of his competitors should follow his lead, he's so brilliant.

The fair natural price for any downloaded CD, DVD or Blu-ray is $1. That will increase sales thousands of times and make big profits for them if they deliver content using the P2P networks. Virtually no cost for them. And piracy will be gone overnight. BUT THEY ARE TOO BLIND TO SEE IT. Poor old dinosaurs!

Wow, if there was ever an example of a media industry exec that JUST DOESN'T GET IT, Mr. Zucker is it. iTunes has succeeded because it gives consumers exactly what they want; a la carte buying without being forced to buy things they don't want.

Mr. Zucker would have us believe that iTunes has "destroyed" music pricing, when really what it has done is adjust pricing to compensate for the "greed factor" of music (and now TV) studios. CD prices had been on the rise for several years when Napster came on the scene (its own popularity proving that people did in fact want to be able to download and listen to music), and music companies stuck their collective fingers in their ears, chanting "la la la la la la."

TV studios like NBC are now doing the same thing. Apple and the iTunes store have created a whole new way to get their content out to consumers and now TV studios are bitching and whining about wanting more money. NBC should be grateful that Apple designed the iTunes platform and allowed them to earn an extra $15 million from programming they are already earning billions from through advertising, cross-promotions and various other web tie-ins, instead of their constant whining.

I mean, it's not like we saw ANY of the big music or TV companies getting their collective heads together to find a way to let consumers buy what they wanted to buy; 1 or 2 TV shows and only the songs they wanted from an album (instead of also getting the three shit songs that nobody wanted).

Mr. Zucker and and other industry "leaders" continue to fail to understand what consumers are looking for and as long as they do, they don't deserve our business. So, take Heroes, take ER or anything else you'd like to take from iTunes, Mr. Zucker. I very much doubt that you'll find as easy a way to get your digital content out to as many people as iTunes currently does and when you fail, ask yourself if it was worth losing $15 million dollars a year from iTunes and pissing off the very customers that are buying your programming in the first place.

I'm viewing all this as a bemused outsider but I'm wondering what's so wrong with the concept of variable pricing? It doesn't seem an unreasonable thing to ask for. After all, we're all used to DVDs for feature films or successful TV shoes costing more when they first come out and then falling over time. Is this a problem?

Doesn't really surprise me considering that NBC and M$ are tied together. Sort of moronic to bad mouth a company like Apple who is doing almost everything right and making media distribution very easy, convenient for everyone.

In addition to the fact that $15 million was added to NBC's purse, you have to think of the long term effect of iTunes. Look at The Office which was greatly helped by the fact that people discovered it on iTunes. Last season alone they did three "producer's cuts" for iTunes because so many people were purchasing them through that service. So iTunes not only created the revenue for the show, but helped it become a hit which created greater ad revenue. There have been quite a few shows that I've discovered because of a free episode or because I saw it on the main page of iTunes. I dare say that iTunes is an important part of the strategy to bring NBC into first place in the ratings.

If you want to say that $15 million is a paltry sum for a revenue stream, I would agree that a corporation like NBC would like to see that grow, but give it time. I had four season passes last season and all of them were from NBC Universal. That's over $100 of my money that they won't get from me this season.

You know, I could understand if $15 million was actually less than the cost of the packaging, shipping, ...
But it's not. To put 1 TV show on iTunes costs how much?? NOTHING!!
NBC is just throwing away profit.

NBC is being extremely unprofessional with how they are handling this. It almost seems like they are going out of their way to burn this bridge permanently.

Also, I don't get their statements about how Apple 'destroyed' music and video pricing. Do they expect customers to pay *more* for digital content than they do for the physical media?

As it is now, the digital content comes out to being just about the same price as the physical media (maybe a tad less), and they don't have to worry about the cost associated with having the product packaged and the retail outlets taking a cut.

I just don't understand it. It seems like NBC is complaining just to complain.

Zucker is young and inexperienced. He's going to end up costing NBC dearly.

I know most of you will not agree with me, but $15 milion per ONE WHOLE YEAR is really not that much... I think it's suprisingly little.

This was essentially FREE revenue to NBC! It was a revenue stream where one didn't exist before. I suppose Zucker thinks it's worth trashing the Apple relationship in exchange for advertising dollars and less visibility through hulu. I'll enjoy watching this one.

They can easily point to Apple destroying the music business as a lot of the music companies are unhappy with the per song pricing structure, especially at a flat rate. They're used to selling albums out at anything up to £16 which we had no choice but to buy to get maybe 3 or 4 songs we actually wanted. Our only alternative was to buy a CD single for £4. As a consumer I'm much happier paying 79p per track and having just the ones I want but of course they're used to having it easy so this is a pita for them. Each track on an album has to be a quality release in order for me to buy them all as opposed to cherry picking. Thing is, I will happily buy a whole album from iTunes if the quality and innovation is there so in order to maintain fat profits they just need to make sure they produce good stuff instead of a load of fillers. So basically they have to work for their money now...

And since the iTunes store I have bought *so much* music! Way more than I ever bought when I was buying CDs. Just checking my "purchased" playlist it seems I have bought 288 items for the iTunes store. Most as individual tracks, but also a handful of albums. That's over 3 years.

I bought 9 items in 2004 (I only started buying in August 2004)
I bought 54 items in 2005
I bought 64 items in 2006
I bought 161 items in 2007 so far

So my music purchases are increasing all the time and I'm getting exactly the tracks I want.

I've spent £288 to get those tracks.
Looking at the album names I would have had to buy 174 albums to get those tracks. Even at a "good" price of £10 per album that would have cost me £1,740 so obviously the record companies think they've lost out. They haven't as there is no way I would have bought most of that stuff if I had to buy the whole album.
Looking at the list of albums again and seeing how many I would have bought assuming 4 tracks as my trigger point to buy the whole album I would have realistically bought 18 albums and again at the bargain price of £10 that would have cost me £180.
So they got an extra £108 out of me by letting me just buy what I want...

Now, paying for tv shows by the show is something consumers are not used to (box sets aside). I expect tv to be free or ad supported (or part of my all I can eat satellite/cable package) so I'm very hesitant to pay for tv shows. And that's at the current pricing, if they think I'll pay an even higher price I'd like to know what colour the sky is where they are...

When it comes to tv shows I actually think a monthly fee for an all you can watch type service would be the way to go. Music and tv are different. Apple need to rethink this. I think the AppleTV would be a lot more successful if I could watch what I want (choosing from a suitably large menu), when I want for a fixed monthly fee like my cable/satellite bill. I have to pay SKY TV in the UK a fee of around £24 per month to do so and would gladly pay Apple up to £30 for the same service but on demand.

And as for wanting a share of hardware sales, do me a favour, they don't get a cut of TV sales (and nor should they), they didn't get a cut of Walkman sales and they're not going to get a cut of iPod sales

I know most of you will not agree with me, but $15 milion per ONE WHOLE YEAR is really not that much... I think it's suprisingly little.

As I stated on MacRumors:

According to Apple's data here Apple has sold over 100 Million TV Shows. At $1.99US per show, that is a gross profit of $199M. If NBC claims that they were responsible for 40% of all video sales, that would mean 40 Million shows or $79.6M gross. If NBC claims they only made $15M in revenue that would mean that Apple pocketed the remaining $64.6M.

Do you really believe for one minute that NBC agreed to a business deal with Apple where they only get approx 19% of the revenue and Apple gets the remaining 81%!

The film industry was a cash cow with silent films until the Jazz Singer along and ruined the market for silent films. Then there was the color television sets of the early 1950's -- rendering black and white television content obsolete. iTunes-- along with on demand content, dvd content, and DVR boxes-- is doing the same thing to broadcast television. Network television is obsolete. Color television was more expensive to produce than black and white television because suddenly things like sets needed to be painted. Silent film beauties who were terrible speakers were replaced. The same is true of network television. But both television and film are better today-- and generate more money-- then they did when films were silent and broadcasts were black and white.

NBC should be embracing iTunes-- and learn to work with it. If Apple wants 1.99 an episode downloads-- then produce shorter content and sell more of it.